But the recent drama in the stock market has not been the most
unnerving thing here.

That would instead be the fact that January's stock volatility
has come after stocks zigzagged dramatically in
August,
September, and
October.

People who are invested in the stock market might
not want to hear this, but this crazy,
multimonth-long volatility is pretty similar to what we see in
the middle of a stock market crash.(The fact
it has only a small chance of happening does not mean that it's
not worth acknowledging.)

Generally, when people think about the dot-com bubble of
1999-2000 and the housing/credit bubble of 2007-2008 in the stock
market, they tend to remember very narrow periods of crazy stock
price moves that keep going and going in one direction:
down.

But, actually, when stock bubbles come to a head, they tend
to make wild swings in both directions. In other words, they
don't just suddenly burst — it's more of a drawn-out, up-and-down
process.

In a
note to clients, UBS strategist Julian Emanuel zoomed
in on the stock market action during the previous two major
market peaks to illustrate this important
observation.

UBS

For what it's worth, below is what the S&P 500 has
looked like over the past six months.

We should point out that Emanuel's charts are over a
slightly longer time frame: the first is over one year, while the
second is over 10 months.

S&P 500 over the past
six months.Google
Finance

It is perhaps most important to emphasize that these three charts
do not predict a crash.

Rather, it's merely a reminder that the volatility in the markets
over the past half-year is not without precedent. After all, it
is extremely difficult for investors and economists to tell
whether the market is in a bubble and, if it is, whether that
bubble is bursting.

But given the recent volatility, one can't help wondering whether
the stock market is crashing. It will be a while, however, before
we can confirm whether that's actually happening.